Performance related pay is not common in Australian universities. A number of Australian universities have begun to show interest in implementing more individualised pay arrangements. Swinburne University of Technology, in Melbourne, has chosen, contrary to the wishes of many of its staff, to be a path-breaker and has introduced a performance related pay scheme. This paper presents a review of the literature pertaining to the effectiveness of performance-related pay, with a particular emphasis on educational organisations. The overall research question guiding the review was to establish the extent to which performance related pay practices have been successful, and in particular, whether or not performance related pay practices are likely to be effective in a higher educational institution. The findings provide very little support for Swinburne's 'Performance, Development and Rewards' scheme. Indeed, it may well be counter productive.